Wholesale inflation in India surges to 2.61%, highest in 15 months

India's wholesale inflation, sale Price Index (WPI), surged to a 15-month high of 2.61% in May, up from 1.26% in April.

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This sharp increase was primarily due to an adverse base effect and a significant rise in food prices. In May 2023, wholesale inflation had been at -3.61%.

Key Drivers of Inflation The inflation in food prices stood notably high at 9.82% during the month. The Ministry of Commerce and Industry released data on Friday indicating that the uptick in factory gate inflation in May was driven by major subindices other than fuel and power, which saw either a higher year-on-year inflation print or a lower deflation.

Within food articles, the pressure on factory gate prices was primarily due to a substantial acceleration in the prices of vegetables (32.42%), pulses (21.95%), cereals (9.01%), fruits (5.81%), and wheat (6%). Despite a deceleration in the prices of potatoes (64.05%), onions (58.05%), and paddy (11.79%), they remained considerably elevated. Meanwhile, prices of protein-rich items like eggs & meat (0.68%) and milk (3.61%) provided some relief.

Impact of Weather and Agricultural Trends